The cash flows below were extracted from the accounts of Picasso and Partners, a painting and decorating business

Required: Prepare a cash flow statement under the indirect method for the year ended 31 December 2005. You know that the operating profit was £111,000 with £75,000 of working capital adjustments to be deducted and £15,000 of non-cash adjustments to be added back to arrive at operating cash flow. The operating profit has already been adjusted for the interest paid and received (so do not adjust again!).

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Bank interest paid 1,000 Loan received 9,000 Cash for sale of a motor car 4,000 Interest received 300 Purchase of a building Sale of office furniture 88,000 2,300 Payment for a motor car 12,000